Apple suppliers seek new opportunities outside China

By

Larry Kudlow
Tim Cook meeting with a person working on the iPhone production line.
Photo: Apple

Apple wants its suppliers to explore manufacturing outside of China — and it seems that many in its supply chain are listening.

According to a pair of new reports, Compal and Quanta, who make the iPad and MacBook for Apple, are looking overseas for future production.

Digitimes notes that:

“Quanta Computer is assessing the feasibility of setting up new production lines in Southeast Asia. [These] are most likely to be located in Thailand, where the firm’s affiliates Quanta Storage operates HDD production facilities.”

In a separate report it writes that:

“Compal Electronics is expanding its investment at home and Vietnam to cope with the uncertainty caused by the ongoing US-China trade spat, according to company president and CEO Martin Wong.”

Both companies were named on a list by Apple, listing companies that could move production out of China. Other companies on the list included Foxconn, Pegatron,  and AirPods makers Inventec, Luxshare-ICT and Goertek.

Moving out of China

Recently, Foxconn revealed that it had the capacity to produce all U.S.-directed iPhones outside of China. Wistron, meanwhile, started producing iPhones in Bangalore, India a couple years back. Terry Gou, Foxconn’s departing chairman, has urged Apple to move manufacturing to Taiwan.

Pegatron, another company named on Apple’s list, has also talked about moving iPad and MacBook production out of China. However, according to one other report today, the quantity of Pegatron devices produced outside China is still very small. Digitimes notes that:

“Pegatron at the moment is only having around 1-2% of its overall production done at plants outside of China. [These are] mainly in Southeast Asia and Taiwan, with limited investments in these places, according to company CEO Syh-jang Liao.”

Apple’s concern about China manufacturing is linked to the burgeoning U.S. trade war with China. It also relates to increased costs in China and the risks of centralizing production in one country. As a result, Apple has asked companies to evaluate the cost of shifting 15% to 30% of their production to Southeast Asia.